An automatically generated email sign-off will be considered proof of signature for land contracts in some instances, explains Vicky Khandker, Lodders’ dispute resolution law specialist.
Following the publication in early September 2019 of the Law Commission’s report, “Electronic execution of documents”, the County Court has confirmed that an automatically generated email sign-off will be considered proof of signature for land contracts. This is provided that the common law rules of contract formation, as well as section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 (“section 2”), are both complied with. Section 2 requires all the terms of a contract to be in writing and to be signed by the parties. With the unprecedented scale of UK office workers having shifted to home-working in recent weeks in global efforts to control the spread of Covid-19, there is once more uncertainty over remote signing and execution of documents.
Background on electronic signatures
Shortly after the Law Commission’s report was published, HHJ Pearce sitting in the Manchester County Court delivered judgment in Neocleous v Rees, in which the parties’ solicitors agreed terms by telephone then confirmed them by email. One of the parties subsequently sought to resile from the agreement, on the basis that the email exchange did not comply with section 2. However, HHJ Pearce found that the automatic generation of the solicitors’ electronic signature was sufficient to “sign” the document in accordance with that section. An automatic electronic signature has the power to create a contract if the sender of the email intends, by the inclusion of the signature, to give their authority to the document. The reasoning behind this was as follows:
- The ordinary meaning of the word ‘signed’ had developed, to extend beyond strictly the writing of one’s name in one’s own hand;
- Although the signature is generated automatically in every email sent, the sender would initially have had to consciously input the relevant information in a deliberate effort to create their signature;
- The recipient of such an email would have no way of knowing whether the signature had been inserted automatically or typed out manually.
The court also considered, in this case, that the fact that the sender had typed “Many thanks”, showed intention to associate himself with the specific contents of that email, and the fact that the signature appeared at the end of the email, as is conventional for a signature. Therefore, aside from any formalities of execution relevant to specific legal documents, the requirement for validity of an electronic signature is intention on the part of the signatory.
The current climate
The Covid-19 pandemic has forced the relocation of office-based workers into their homes on an enormous scale and will mean the ability to use electronic signatures is required even more. There are, however, a number of documents which must follow particular formalities in order to be validly executed. This includes deeds and lasting powers of attorney, both of which must be signed with a witness physically present. Where witnesses to signatures cannot be family members, partners, or spouses (such as where they are beneficiaries to a will), observing appropriate social distancing measures could be problematic for signatories. One solution to this might be to sign documents through a window, with a witness observing, before the witness then signs the document on the other side of the window. The parties would need to ensure that they follow suitable handwashing procedures immediately afterwards.
Subject to contract
Because Neocleous v Rees was heard in the County Court it does not create a binding authority, but it does show that an electronic signature could be capable of creating a binding contract. With the current increase in remote working, it is likely that workers will have limited access to printers and scanners and will be relying heavily on electronic signatures. It is suggested, therefore, that terms such as ‘subject to contract’ or similar should be used, unless you intend to create a binding contract. Further, if you do intend to create a binding contract, consider including express wording in the document to acknowledge that an email signature is valid.
Where contracts and agreements are being sent between parties in editable formats to allow for the addition of electronic signatures, a precautionary measure might be to include, as standard, a pdf of the agreed final form of the wording of the agreement alongside the document for signature.
The Covid-19 pandemic is certainly throwing up a great many challenges but, where companies have already got strong IT support and contingency planning in place, the timely developments in electronic signatory validity should enable business to continue relatively smoothly.
If you require any further information about the issue of electronic signatures and execution of documents remotely, please do not hesitate to contact Vicky Khandker, or any other member of Lodders’ Dispute Resolution team.
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